The Joplin Globe, Joplin, MO

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June 21, 2012

More homeowners refinancing under revised program

Sun Sentinel (MCT)

FORT LAUDERDALE, Fla. — Pembroke Pines, Fla., resident Carl Andrietta is among a growing number of “underwater” homeowners nationwide who are refinancing their mortgages through a revised government program.

The original Home Affordable Refinance Program reduced fees and loosened eligibility requirements starting in January, but the changes were not fully available until March.

More than 180,000 homeowners across the country have refinanced through the program in the first quarter of 2012, up 38 percent from a year earlier, according to the Federal Housing Finance Agency. It credits the program changes for the increase.

The program debuted in 2009, but many homeowners couldn’t qualify because they owed far more than their properties were worth.

Even with the revisions, borrowers must be current on their payments and the loans have to be originated by May 31, 2009, and backed by Fannie Mae or Freddie Mac, the government-run companies that own about half of all home loans nationwide.

Andrietta has lived in his home for 27 years but found himself underwater after refinancing near the peak of the housing bust in 2007 to pay for his daughter’s college education.

He qualified for a refinancing that lowered his $1,595 monthly payment to $1,291.

“That $300 allows us to pad our savings for the future,” said Andrietta, a 59-year-old mailman and college baseball coach.

While the housing market has shown signs of strength, nearly one-third of mortgages are underwater, according to first-quarter data from real estate website Zillow.com.

Nearly 5 percent of mortgages carry a balance that’s twice the home’s value, Zillow said. Those homeowners now can qualify for the revised program, which eliminates a provision that required mortgages be within 125 percent of the value of the home.

“If someone owes $300,000 on a $100,000 home, we could still look at refinancing that,” said Doug Leever, mortgage sales manager for Miramar, Fla.-based Tropical Financial Credit Union. “They could get reduced interest rates and reduced payments. It’s tremendous.”

Fort Lauderdale resident Kurt Moritz saved nearly $400 a month. The refinancing was timely - he and his wife had a son last year, and the couple is temporarily getting by on one income.

“We can live a little more comfortably,” said Moritz, 35. “It’s great to be saving money because expenses go up with a child.”

In some cases, historically low mortgage rates are helping homeowners refinance 30-year mortgages to 15 years, said Ryan Paton, president of Capitol Lending Group in Fort Lauderdale.

Their monthly payments might go up by $100 or $200, but the homeowners can get out from being underwater within a few years, he said. They can avoid foreclosures or short sales and not be forced to wait a decade or more for values to increase, Paton said.

Still, the qualifications will exclude many borrowers who need help, said Alex Pool of Academy Mortgage in Boca Raton, Fla. And some lenders impose their own restrictions, he said.

“You’ll have some people falling through the cracks,” Pool said. “It’s better than (the first program), but it’s not the final solution.”

 

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